Earnings Dominance, Apple Versus IBM (AAPL, IBM)

What do Apple Inc. (NASDAQ: AAPL) and International Business Machines Corp. (NYSE: IBM) have in common, besides earnings due after the close?  Both stocks are essentially sitting at all-time high share prices going into earnings.

For Apple, estimates have risen even since the end of last week as we expected.  Thomson Reuters has estimates of $4.06 EPS and $18.86 billion in revenues versus $4.03 and $18.72 billion in revenues just at the end of last week. The company’s prior guidance was about $3.44 EPS and about $18 billion.  Some analysts are north of $4.20 EPS and above $19.5 billion in revenues.  The consensus from Thomson Reuters for the following quarterly report is $4.99 EPS and $22.06 billion in revenues.  Be advised that the report on Monday will give it the formal September year-end for 2010 and those estimates are $14.50 EPS and $63.56 billion in revenues.  We recently gave a full heads-up review of all of the most recent analyst calls we could find for Apple.

For IBM, Thomson Reuters has estimates of $2.75 EPS and $24.12 billion in revenues.  Next quarter estimates are $4.00 EPS and $27.91 billion in revenues.  For all of 2010 the estimates are $11.29 EPS and $98.75 billion in revenues; for 2011 the estimates are $12.37 EPS and $102.46 billion in revenue.  Here is a preview and review of each of the other 10 of the 30 DJIA components scheduled to report earnings this week.

For IBM the largest item to watch is what the company discloses and notes about its backlog for services.  That is effectively its future orders already on the books that will make up a part of its revenues in the months, quarters, and even years ahead.  IBM said its services backlog last quarter came in at $129 billion, which appeared to be down but the company said it would have been up by $1 billion had it not been for currency adjustments.  IBM literally began its soar after the woes of Hewlett-Packard Co. (NYSE: HPQ) started and that may have been a key catalyst.

For Apple, it comes down to unit share growth in iPads and in new iPhone sales.  Maybe we hear more about this CDMA iPhone for Verizon or maybe we just have to hear about the iPad.  Gross margin has fallen for Apple and that came to 39.1% last quarter, while its cash

Back to the all-time highs… IBM hit a high of $142.67 this morning.  Shares have run from August lows of about $123 to this level and IBM shares are up 10% year-to-date from the $129.01 close at the end of 2009.  Apple hit a high of $319.00 this morning.  Shares have run more than 30% from August lows of about $240 to this level and Apple shares are up about 45% year-to-date from the $210.73 close at the end of 2009.

A big earnings day for tech, and a massive earnings flow for the week.

JON C. OGG